A l B l C l D l E l F l G I H I J I L I M I N I O I P I R I S I T I U I V I W I Y

Jargon Buster


Accident, sickness and unemployment insurance (ASU)

Also known as Mortgage protection insurance and Payment protection insurance.

Accrual rate

The rate at which pension benefits build up each year in a final salary pension.

Accrued interest

The amount of interest that has accumulated (grown) on an investment over time.

Account aggregation

This allows you to view all your online accounts on a single website. This could include your current account, savings and investments, mortgage, credit cards, personal loans, and reward schemes such as supermarket reward points or Air Miles. It may be provided by a financial institution (who you may already hold an account with) or through a website not owned by a financial institution. Only a small number of firms offer this service in the UK.


An individual who is currently an approved person - see 'Approved person'.

Activities of daily living (ADLs)

Certain activities such as washing, dressing or feeding yourself.


Professionally qualified person who makes calculations on which pensions, insurance and investment companies base their products.


Legal - A person appointed by a court to handle the administration of an estate for someone who has died without a will.

Company pension schemes - A person who looks after the pension scheme's affairs and can provide information.

Insolvency - A person appointed to manage a company when it is having financial difficulties.

Advance fee scams

A letter or email that offers vast sums of money for an upfront payment to help someone, possibly a business venture or a sick child.

Affinity card

A credit card that is issued on behalf of charities or other organisations such as football clubs and universities. The card company usually makes a donation to the charity or affinity group when the card is issued and/or each time you use the card - at no additional cost to you.

Affinity fraud

A scam which targets members of a particular community or religious, ethnic, elderly or professional group.

AER (Annual Equivalent Rate)

The rate of interest earned within a year, irrespective of how often interest is added to your account. The higher the AER, the better the return.

Age allowance

An additional personal allowance for people aged over 65.

Allocation rate

Describes how the money paid into a pension is used. The company you invest with will take some of your money for charges (eg administration fees). The amount remaining is the allocation rate.

Alternative Investment Market (AIM)

An alternative index to the FTSE (Financial Times Stock Exchange) of around 400 companies listed on the London Stock Exchange. Usually used by smaller companies.

Ancillary relief order

An order by a court dealing with the way income, property, other possessions and pensions are split between a couple on divorces.

Annual statement

A statement from your mortgage lender, sent every year, showing among other things what you've paid and what you still owe.


An annuity converts a lump sum (usually from a pension fund) into retirement income.

Applied (or nominal) interest rate

The rate of interest which the lender uses to calculate the amount you actually owe them. The applied or nominal interest rate will not be the same as the APR as it does not include all charges. Hence it will be lower.

Appropriate personal pension

A pension plan that can be used to contract out of (leave) the State Second Pension (formerly SERPS).

Approval in principle

A certificate which some mortgage lenders will give you that shows the amount they will probably be prepared to lend you. This is not a guarantee, but can be helpful when signing up with estate agents.

Approved person

Someone the FSA has approved to perform certain roles for an FSA authorised firm or an appointed representative.

APR (Annual Percentage Rate)

The overall cost of borrowing if you owe money on your credit card, loan or overdraft.


A voluntary arrangement where an impartial outsider is asked to make a decision on a dispute. Mediation, conciliation and arbitration.

Arrangement fee

A fee that you pay a lender, usually to reserve the funds for a mortgage or lifetime mortgage.


An unpaid debt, for example your mortgage or other loan.


Anything that is valuable, useful or earns money. In money terms this is used when talking about investments.

Asset allocation

The spread of investments across the asset classes.

Asset classes

The underlying investments - shares, bonds, property and cash deposits.


Life insurance - a contract between the policy owner and the insurer, whereby the insurer agrees to pay a sum of money when the policy owner dies.

ATM (Automated Teller Machine)

Cash machines or cash points found in many public places. They allow you to check your bank balance and take out money from your bank account using your cash card and PIN (Personal Identification Number)

ATOL (Air Travel Organiser's Licence)

A licence that tour operators should hold - this protects you from losing money or being stranded abroad if the tour operator goes out of business.

Attendance Allowance

A tax-free benefit for people aged 65 or over who need help with personal care because they are physically or mentally disabled.

Authorised firm

A firm that has permission from the FSA to carry out regulated activities.

Authorised overdraft

You and your bank agree an amount which is available for you to spend even if you don't have money in your account. If you do this the bank will usually charge you interest and sometimes other fees as well.

Authorised Payment Institution

A firm that has permission from the FSA to carry out payment services.

Automated credit transfer (ACT)

Payment of wages, salary, benefits, pensions and tax credits directly into a bank or building society account (also known as direct credits).

Available balance

The amount of money that you may spend or withdraw from your account, including your arranged overdraft. This does not reflect any daily limits on spending or withdrawals.

AVCs - Additional Voluntary Contributions

A pension top-up for an occupational pension. You pay contributions into a scheme run by your employer to boost your main pension.


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Bacs payments

A direct transfer into your account from someone paying you (for example, your employer).

Bad debt

A debt which is uncollectible and has been written off as a loss by the creditor. The debt may be passed to a third-party collection agency to chase.


The sum of money showing on a bank or credit card statement. A positive balance refers to the amount you have in your bank account. A negative balance refers to the amount you owe.

Balance transfer (credit cards)

Where you can transfer some of your debts from one credit card to a new one and pay the sum off, usually at a 0% interest rate for a set period of between six and 14 months. After this period ends, the balance begins to attract interest.

Balloon payment

A lump-sum payment which is chargeable at the end of a loan to pay off the total debt remaining. The amount is normally larger than the previous instalments.


An organisation that offers a range of financial services (for example current or savings accounts, loans and mortgages).

Bank assurance

The sale of insurance through a bank. The most common type of bank assurance is when a bank requires life insurance on mortgages. The borrower can buy the insurance directly from the bank.

Bank balance

The amount of money in a bank account.

Bank charge

A fee payable to banks for going overdrawn or for bouncing payments (Direct Debits, cheques or standing orders). The penalty amounts differ from bank to bank.

Bank rate

The main interest rate in the economy, set by the Bank of England, upon which others rates are based. Known as the 'base rate' until 2007.

Bank statement

A document which shows all the money going in and out of a bank account.

Bankers' draft

A cheque drawn up by your bank, often used when making large purchases. Banks usually charge a fee for issuing drafts.


Bankruptcy is a legal status that usually lasts for a year and is a way of clearing debts you can't pay. Bankruptcy has a number of consequences.

Base rate

See Bank rate.

Basic bank account

A bank account for managing day-to-day money. It doesn't usually allow you to go overdrawn by more than £10, if at all.

Basic State Pension

A government-administered pension, based on the number of qualifying years gained through National Insurance contributions (NICs) you've paid or been credited with throughout your working life.


See Beneficiary.


The person who receives money or other assets from, for example, an insurance payout or inheritance on someone's death. The person who took out the insurance premium or owned the assets is the benefactor.


You may be eligible to receive financial and other support from the State if you are on a low income or have certain costs to meet because of your personal situation.

Bid price

The price at which an investment can be sold.


A document showing how much money is owed for something.

Bogus communications

A scam involving letters or emails from fraudsters claiming to be a bank or other financial services firm asking you for your personal details.

Boiler rooms

A scam involving unsolicited calls from overseas offering you shares in a company which may be worthless and with no right to complain or get compensation if things go wrong.

Bond funds

Pooled investments investing in bonds.


A loan to a company or the government.


An allocated amount of money which a business or individual has to use for expenditures within a particular time-frame.

Annual announcement of fiscal policy changes by the Government - delivered by the Chancellor of the Exchequer. Normally takes place in March every year and includes changes to taxation for the new tax year starting in April.


A way to work out how much money you have coming in and going out each month.

Building society

A financial company that offers similar services to a bank (for example current or savings accounts, loans and mortgages) but is owned by its members (its customers).

Buildings insurance

Pays the cost of repairing or rebuilding your home if it is damaged by unforeseen events (as detailed in the insurance policy).


A sum of money given to you by an organisation, such as a university, to pay for you to study.

Buy-to-let mortgage

A loan you take out to buy a property which you intend to rent to tenants.


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Cap and collar rate

A mortgage interest rate that cannot go above the cap nor fall below the collar.

Capital (savings & investments)

The overall amount of money saved or invested.

Capital (loans & mortgages)

The amount you borrow.

Capital growth

Any increase to your original investment after costs, charges and depreciation have been taken into account.

Capital units

When you buy life insurance, these are the units bought by the premiums in the first year or two which are subject to a higher annual management charge.

Capped mortgage

A mortgage that has a maximum limit on the interest rate you'll have to pay during a special deal period.

Card issuer

The bank, building society or store whose name is on your credit or debit card.

Care home

A home for elderly or disabled people who need constant care.

Cash advance

A cash loan from a credit card account, which you can get from a cash machine or a bank withdrawal.

Cash (ATM) card

A plastic card that lets you get cash from your account through cash machines, at your bank or building society branch and by using cashback facilities at, for example, supermarket tills. You can also use it to make telephone or internet payments.


A service that allows you to get cash from your current account in supermarkets or other shops, using your debit card.

Cashback mortgage

A mortgage that comes with a cash sum (often a percentage of the amount you're borrowing).

Cash ISA

A savings account with a limit on how much you can save in each tax year. The interest on the savings is tax free.

Chain letters

Letters or emails that claim to guarantee you a huge return for a small initial investment and contains a list of contacts.


A facility where you can ask your credit card company to refund your card if you have a dispute over a transaction, for example for any goods or services that you didn't receive or that turned out to be faulty.


A printed piece of paper used to make payments from your bank current account to someone else. You'll get a supply of them in the form of a book. You'll usually be sent a new book before you run out - see Cheque book.

Cheque book

A book of cheques which let you make a payment from your bank current account to someone else by writing a cheque in their favour.

Cheque guarantee card

Makes cheques up to the guarantee limit widely accepted, because the person you're paying is guaranteed to receive the money, whether or not you have enough in your account.

Child Benefit

Tax-free cash you get from the State if you are a child's main carer.

Child maintenance

Money paid to the parent with the main day-to-day care of the child by the other parent who no longer lives with them. The money is to help towards a child's everyday living costs.

Child Maintenance and Enforcement Commission

A government agency responsible for running the Child Support Agency and Child Maintenance Options website.

Child Maintenance and Enforcement Division

The government agency responsible for child maintenance in Northern Ireland.

Child Maintenance Options

A government website describing the different arrangements available for paying child maintenance.

Child Support Agency

A government agency that can arrange for the payment of child maintenance between couples who have split up.

Child Trust Fund (CTF)

A long-term tax-free savings and investment account for children born on or after 1 September 2002, which they can access once they turn 18.

Children's Bonus Bonds

Savings bonds for children and young people up to age 21 offered by National Savings & Investments, a government agency.

Chip and PIN

The combination of a credit or debit card equipped with a microchip and your unique four-figure number, which you must use when you spend with your card.

Citizens Advice Bureau

A voluntary organisation offering unbiased advice on money matters, including tax and benefits, legal and social issues etc.

Civil partnership

Agreement between partners in a same-sex couple, legally equivalent to marriage.

Claims management firms

These firms offer to help you with your complaint either on a no-win, no-fee basis or they charge an upfront fee. They can pursue your claim regarding compensation for an accident or something financial, such as making a complaint about your endowment mortgage, or reclaiming payment protection insurance (PPI) or bank charges.

Clean break

A divorce settlement that settles all money and other issues once and for all, so that the former partners do not have to have any continuing contact.

Cleared and uncleared balances

A cleared balance shows the money that has already reached your account and is ready for you to use. An uncleared balance includes the money in transit to your account but not yet available.


A cheque goes through a clearing cycle before the money can be released to make sure that there are sufficient funds in the person's account to cover it.

Closed fund

A with-profits fund which no longer takes on new business.

Collaborative family law

A process where each person appoints their own lawyers but instead of negotiating by phone or letter, meet each other face to face to work things out.

Collared mortgage

A mortgage with a minimum interest rate you'll pay during a deal period.

Collective investment scheme (CIS)

A way of pooling contributions from lots of people into a single investment fund.


A payment to someone, for example a financial adviser, for arranging for a product to be sold.

Companies House

A government department which registers all limited companies in England, Scotland, Wales, as well as some in Northern Ireland (except credit unions and industrial and provident societies)

Compound interest

Interest that is calculated on the original amount borrowed or saved, as well as any interest already charged or earned.

Compulsory excess

Insurance quotes are partly dependent on the excess. The excess is the amount of any claim you would be willing to pay before the insurer steps in to cover the remaining costs. The compulsory excess is the amount stipulated on the insurance policy. Your voluntary excess may be added to the compulsory excess.

Consent order

A court order making a voluntary agreement negotiated between a separating or divorcing couple legally binding.

Consolidation loan

Rolling all your debts into a single loan, usually with a lower monthly payment and a longer repayment period, which will cost you more in the long run.

Consumer Credit Act

The Consumer Credit Act applies to most businesses that lend money to consumers or offer goods and services. The Act requires that these businesses obtain a consumer credit license from the Office of Fair Trading (OFT).

Consumer Price Index (CPI)

One of the official measures of inflation. It is calculated each month by taking a sample of goods and services that a typical household might buy, including food, heating, household goods and travel costs. The other measure is the Retail Price Index (RPI).

Contents insurance

Covers the cost of replacing possessions lost or damaged due to unforeseen events (as detailed in the insurance policy)

Contract of employment

An agreement between an employer and an employee. Your rights and duties, and those of your employer, are called the terms of the contract.

Contracting out

An agreement between you and a pension provider to have part of your National Insurance contributions paid into their scheme, which will pay you a pension instead of the State Second Pension

Contracts for Difference (CFD)

An agreement between two people to settle at the close of their contract the difference between the price of a company's share when the market opens and when it closes.

Conveyancing Fee

The fee charged by a solicitor or licensed conveyancer after the legal paperwork for transferring a property has been completed. As well as this fee, you will usually have to pay stamp duty land registry fees and legal disbursement fees.

Cooling-off period

The time you have to change your mind and have your money back when buying insurance or other financial products or services. The actual time varies, so check your paperwork.

Corporate bond funds

Funds that invest in a selection of individual company bonds.

Corporate bonds

A certificate of debt issued by companies - essentially an IOU. You get a fixed income, but the price of the bond moves up and down until maturity.

Council Tax

Council Tax helps pay for local services like policing and rubbish collection. It applies to all domestic properties, whether they are owned or rented.

Council Tax Benefit

A State benefit meeting part or all of a person's council tax bill if their income and savings are low.

County Court Judgment

A judgement for debt, which can remain on file for six years and make it hard, or impossible, to borrow money in the future.


A bond's fixed rate of interest as a percentage of its nominal value.


The protection given by insurance.

Covered warrants

Tradeable securities on the London Stock Exchange.


Buying on credit is a form of borrowing. It includes paying by credit card or store card, hire purchase, and other credit agreements including interest-free credit where you 'buy now pay later'.

Credit card

A plastic card used instead of cash to buy things. You buy, and then pay later when you receive a statement from the credit card provider showing what you owe.

Credit card issuer

The bank, building society, or credit card company that gives you your credit card and is the name on your contract.

Credit card protection insurance

An insurance policy that can cover you against fraudulent use of your cards if they are lost or stolen. Consider whether you need it.

Credit check

A search of your borrowing record, also known as your credit history. A bank or other organisation carries out a credit check on a person when deciding whether to lend them money or to open a bank account in their name.

Credit history

Record of an individual's past borrowing and management of the repayments.

Credit limit

The maximum amount you may borrow on a credit or store card. This is determined by your credit score.

Credit reference agency

A firm whose business is gathering data about individuals (and businesses) that can be used by lenders to assess creditworthiness.

Credit scoring (or credit rating)

The system your card issuer uses to decide whether to provide you with a card, and to set your credit limit. Credit scoring works by awarding points to the information you provide on your application form and to the information recorded on your credit report (held by a credit reference agency).

Credit union

An organisation that lets you save and borrow money. They are owned and run by their members, for their members. Membership depends on people having a common bond.


The centralised electronic settlement system for shares traded on the London Stock Exchange.

Critical illness insurance

A long-term insurance policy designed to pay a lump sum on the diagnosis of certain life-threatening or debilitating (but not necessarily fatal) conditions.

Current account

A bank deposit which you can pay money into or withdraw. Current accounts are normally used for day-to-day living expenses and payments.


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Debit card

A card issued by a bank or building society which you can use to withdraw cash or to pay for your shopping or services or to get 'cashback'. The money is usually taken from your current account's available balance.

Debt counselling

Professional help and advice to get out of debt and manage your money.

Debt securities

Another name for a bond.

Decree absolute

Final declaration that a marriage has been ended by divorce.

Decree nisi

Preliminary declaration that a marriage has been ended by divorce, giving a brief period of time in which anyone can raise objections to the divorce becoming final.

Deferred pension

The pension benefits (in a defined benefit scheme) that you leave behind when you leave employment. They will be paid to you when you reach pension age.

Defined benefit

Also known as final salary - an occupational pension that is worked out on your salary and the number of years of membership of the scheme.

Defined contribution

Also known as money purchase - a pension that builds up a personal fund which is converted into an income at retirement. Available through work or you can start one yourself.


A reduction in the prices of goods and services, and the value of wages, which results from the slowing down of a nation's economic activity. It is the opposite of inflation and usually occurs during a recession. It is measured by the Consumer Price Index.


The process through which a member-owned company (a mutual) floats on the stock exchange and becomes a shareholder-owned company.

Dental insurance

A type of health cash plan that focuses specifically on dental care expenses.

Department for Work and Pensions (DWP)

The government department with overall responsible for the rules governing pension schemes and the administration of the State pension.


An individual who relies on you for financial support.


Banking - A sum of money that you place with a bank, building society or credit union. It will be repaid to you, with or without interest or a premium, either on demand or subject to access restrictions, as agreed in advance.

Buying a home - The amount of money that you're putting into buying a home (not including the mortgage money you're borrowing).


The drop in value between the price you paid for a product and the price you can sell it for.


A right or an obligation to buy or sell another type of asset - such as a share or a bond - to someone else at a specific date and time in the future.

Direct Debit

A way of paying bills from your current account. You sign a form allowing the company you are paying to take the money directly from your account on specific dates. They then take the money from your account automatically on the agreed dates. They have to notify you in advance before changing the amount or the payment dates.

Disability Living Allowance

A tax-free benefit for children and adults who need help with personal care or have walking difficulties because they are physically or mentally disabled.

Discounted mortgage

This has a discounted variable rate of interest for a set period, after which the rate will increase.

Distribution bond

A type of investment bond that provides a regular income.


Spreading your investments across different asset classes, or different types of investments within an asset class.


A payout, usually from shares. Most shares pay an interim and final dividend.


The legal termination of a marriage. The equivalent for a civil partnership is 'dissolution'.

Dormant account

A bank or building society account that you haven't used for a long time.

Drawdown facility (mortgages)

In a lifetime mortgage you can take occasional small amounts rather than one big loan. So you only pay interest on the money you actually need.

Drawdown facility (income withdrawal) - pensions

You can take a taxable income direct from your pension fund while the remainder remains invested. You must convert your pension fund into retirement income from your 75th birthday.


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Early repayment charge

A charge you may have to pay if you break off a mortgage deal - by paying it back early and/or moving to another lender.

Earmarking (also known as attachment)

A method of splitting pensions on divorce, where one of the couple will be paid a pension or lump sum from the other's pension scheme, for example, when the pension scheme member reaches retirement.

EEA Authorised

A firm that is authorised by a financial services regulator in another country in the European Economic Area (EEA), ie the European Union and Norway, Iceland and Liechtenstein.

EHIC (European Health Insurance Card)

The card enables you to access reduced cost, sometimes free, state-provided healthcare in the European Economic Area and Switzerland, that becomes necessary during your trip because of either illness or an accident. It also covers you for pre-existing conditions.

Electronic money (e-money)

Is prepaid cash that is stored on an electronic device and which can be spent with third parties. E-money can be accessed by means of a plastic card, mobile phone or other electronic device, or else online from a computer.

Electronic payment

A payment carried out without you having to be present, for example Faster Payments Service, Bacs and CHAPS.

Emergency fund

Money you put aside to help you pay bills and buy important items if you are short of cash.

Emergency tax

A 'special basis' tax code until HM Revenue & Customs (HMRC) has worked out what your correct tax code for the year should be.


You're classed as an employee if you're working under a contract of employment.

Employment and Support Allowance

A State benefit that pays an income to people who are unable to work because of illness. It replaced Incapacity Benefit for new claimants from October 2008 onwards.


An investment plan that you usually pay into each month and that pays out a lump sum at the end of a set period or on death, whichever comes first. Usually used for interest-only mortgages.


Another name for shares in a company.

Equity release

A way in which older customers can benefit from the value of their home without having to move out - by borrowing on it or selling all or part of it for a regular income or a lump sum.


Your estate is everything you own when you die, less what you owe.


The amount you agree to pay before your insurer pays the rest of the bill (for example, the first £100 of a claim).

Excess surplus

The amount of capital in a with-profits fund which is not needed as working capital, and can be distributed to policyholders and shareholders (if any).

Exchange rate

Also known as the foreign-exchange rate, forex rate or FX rate. It is the rates between two currencies that specifies how much one currency is worth in terms of the other.

Exchange Traded Funds (ETFs)

An open-ended investment fund which tracks certain indexes and is bought and sold on an exchange rather than through a fund manager.


Things that your insurance will not cover.

Execution only

Selling or buying shares thorough a broker who gives no advice, but merely executes your instructions.


The person (who may be named in someone's will) who deals with a person's affairs after their death.

Extended warranties

An insurance policy to cover goods, eg TV or washing machine, against breakdown.


The amount of money spent on goods or services.


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Faster Payments Service

Enables electronic payments, typically made via the internet or telephone, to be processed in hours rather than days.

FCPs (Fonds Communs de Placement)

A type of open-ended investment fund.

Fee-based financial adviser

An adviser who charges a fee, either at an hourly rate or a set fee for giving financial advice.

Final salary pension

Also known as a defined benefits scheme, this is a pension available through your employer. The amount of pension you get is worked out on your salary at or near retirement, or when you left employment, and your pensionable service.

Financial advice

Discussion and a recommendation about the most suitable financial product for you made by an adviser who is regulated by the FSA.

Financial Ombudsman Service

The official independent complaints scheme which works to resolve complaints between consumers and businesses providing financial services.

Financial Services Authority (FSA)

The UK financial services regulator.

Financial Services Compensation Scheme (FSCS)

The FSCS can pay compensation to customers of authorised firms if a firm is unable, or likely to be unable, to pay claims against it.

Fixed rate

An interest rate that is fixed (ie it doesn't move up or down) for a set period of time. This is relevant to savings and mortgages.

Fixed-repayment lifetime mortgage

You take out a loan that pays you a cash lump sum and, instead of paying interest on the loan, you agree to pay the lender more than you borrowed when you sell your home.


A right to sell a company's products in a particular area using the company's name.

Friendly Society

A mutual benefit organisation which offers a variety of savings and insurance plans. Mutual organisations are owned by their members and are accountable to them rather than to shareholders.

FSA (The Financial Services Authority)

The UK's financial services regulator.

FSAVCs (Free-Standing Additional Voluntary Contributions)

A pension top-up policy for an occupational pension, but separate from your employer's pension scheme and normally run by an insurance firm.

FTSE 100

The Financial Times Stock Exchange 100 index, which is made up of the 100 largest firms quoted on the London Stock Exchange.

Funded Unapproved Retirement Benefits Scheme (FURBS)

Now known as an Employer-Financed Retirement Benefits Scheme (EFRBS).These are unapproved pension schemes with no tax reliefs that an employer funds to provide a member with a lump sum and/or income.

Fund manager

The expert running a unit trust, investment trust or pension fund who decides what shares, bonds or gilts the fund should buy or sell.

Fund transfer scam

A scam which tempts you to use your bank account to withdraw cash transferred into it and send it on using a money-transfer service (for a commission).


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The use of borrowing potentially to increase the amount you get back; however, it will also increase the risk.

General insurance

Most types of insurance including cover for cars, homes, contents and travel.


Bonds issued by the UK government.

Government Actuaries Department (GAD)

A government department that provides actuarial advice and guidance to the government and public-sector schemes.


Before tax has been deducted (as opposed to net, which is after tax has been deducted).

Gross interest

Interest paid to you before tax is taken off is gross interest. If you are a non-taxpayer you can register to have the interest paid gross - ask the bank or building society for Form R85.

Group Personal Pension

A type of personal pension offered by some employers but not classified as occupational.

Guaranteed Annuity Rate

At a certain maturity date your pension provider will provide an annuity at a guaranteed rate.

Guaranteed Equity Bond

A structured deposit, unlike a traditional savings account, which pays a fixed rate of interest. The interest will depend on the performance of a stock-market index or asset.


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Health cash plans

Insurance that provides limited cash sums towards everyday healthcare bills.

High-yield bond funds

The same as bond funds but investing in higher-risk bonds that offer a higher interest rate.

Hire purchase

A loan to buy goods. You pay it back with interest over an agreed time. You do not legally own the goods until you've paid back all the money you owe.

High income plan

You take out a loan that pays you a cash lump sum and is secured against your home. You buy an annuity with the lump sum to give you a monthly income, usually fixed for life.

Home reversion

You sell all or part of your home in return for a regular income or cash lump sum or both, and continue to live in your home for as long as you wish.

Housing association

Housing associations provide affordable homes for people on low incomes to rent or to buy.

Housing Benefit

A State benefit meeting part or all of a person's rent bill if their income and savings are low.


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ICVS (Investment Company with Variable Capital)

A type of OEIC (Open-ended investment fund).

Identity fraud/theft

Someone steals your personal details and pretends to be you. In this way they can steal money from your bank account spend money on your credit card, or take out a loan in your name.

Immediate care long-term-care insurance (LTCI)

A care plan you can buy with a lump sum when you've been medically assessed as needing care.


Someone who is no longer an approved person - see 'Approved person'. Being inactive does not necessarily mean that the person has done anything wrong. Inactive individuals may have retired or changed to a job that no longer needs FSA approval.

Income multiples

The factor by which your earnings are multiplied to work out how much you can borrow.

Income protection insurance (permanent health insurance)

Insurance that pays you a monthly income if you're unable to work due to illness or injury, until you are able to return to work, or retirement age, whichever is the sooner.

Income tax

A tax you pay on your income above a certain level.

Income withdrawal

A type of unsecured pension. You withdraw income directly from your fund within guidelines set by HM Revenue & Customs while your pension fund remains invested.

Independent complaints scheme

Independent complaints schemes (for example an Ombudsman) aim to settle disputes about financial products or services impartially. Their services are free for consumers.

Independent financial adviser

A professional who advises on suitable financial products after researching the whole market having investigated your needs and circumstances. They also offer the opportunity to pay by fee for their advice.

Inheritance tax

A tax that is paid on your estate, which is everything you own at the time of your death, less what you owe.

Inherited estate

Part of a with-profits fund which is working capital to help with smoothing and investment flexibility and is above what the firm needs to pay out in benefits and charges.

Instant access accounts

Savings accounts that let you take your money out whenever you want, without penalty.


A product you buy to pay you money if the something goes wrong. There are lots of insurance products available.


Interest refers to both the charge made by lenders on money you borrow from them and the amount earned by your savings. Interest can be variable (goes up or down) or be fixed.

Interest rate

Loans and mortgages - the figure that determines how much interest you pay.

Savings - the figure that shows how much interest you earn.

Interest-free period

The period between the date you buy something on a credit or store card and the date when you must pay your bill. This can be 50 days or more. So if you settle your bill in full every period, you won't be charged interest.

Interest-only lifetime mortgage

You take out a loan on which you only pay the interest back each month. You do not pay off any of the capital. Instead, in a lifetime mortgage, the lender will be repaid by selling your home when you die or go into long-term care.

Interest-only mortgage

A mortgage where you only pay the interest charges of the loan each month. This means you are not reducing the loan amount (or capital) itself, and this will need to be repaid in some other way.

Introducer A.R. (Introducer Appointed Representative)

A firm that can only introduce customers to a firm or members of the firm's group, and/or give out certain kinds of marketing material. It must be a representative of either an authorised firm or an EEA-authorised firm.

Introductory offer

A period after you first get your credit card, when a lower interest rate or fee schedule may apply.

Investment trusts

A pooled investment. You are buying shares in a company that invests in other investments. It has shares and is quoted on the stock exchange. It is a closed-ended fund as there are a set number of shares available.

Investment/insurance bonds

A pooled investment; a lump-sum life-assurance investment. They can also be called life-assurance bonds and with-profits bonds.

ISA (Individual Savings Account)

Savings or investment products that earn tax-free interest. You can only invest up to a set limit in each tax year.


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Jobcentre Plus

Government agency that provides help and advice on jobs and training for people who can work and financial help for those who cannot.

Jobseeker's Allowance

A State benefit for people who are out of work.

Joint-life insurance

Typically, life cover usually taken out by two related individuals which pays out in the event of either or both people dying.

Joint ownership

There are two ways in which possessions or investments can be owned jointly: as joint tenants, in which case all the owners have equal shares and equal rights; or as tenants in common, in which case each has a distinct share which may be unequal, for example, one owner might have a 40 per cent share and the other 60 per cent.


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The owner of a property you rent. The landlord owns and oversees the upkeep of it to make sure it is maintained to a safe standard for you to live in.

Legal fees

A fee you pay to a solicitor for their services. You may use a solicitor to help you buy a property, or go through divorce.


A person or organisation that lends money and charges interest on money owed.

Liability insurance

Insurance that helps a business pay financial compensation to compensate customers or the public for any damage or harm the business causes.


London Inter-Bank Offered Rate. The rate at which banks lend to each other.

Life assurance investment

A pooled investment offered by a life assurance company.

Life insurance

Life insurance is a way to provide some financial security for people who depend on you if you died. There are different types, but the policy usually pays out a lump sum or an income when the person insured dies.

Life insurance (investment-backed)

Insurance which has two roles: to pay out when on death and to act as an investment.

Life insurance (term)

Insurance which pays out if death happens within the time specified (the term).

Lifetime annuity

A lifetime annuity converts money from your pension fund into pension income which is paid for the rest of your life.

Lifetime mortgage

A loan for older customers which is secured on their home to provide a lump sum or income. The loan is repaid by selling the home when the customer dies or goes into long-term care.


A bank loan is a set amount of money which the bank has agreed to lend you for a set period of time. Payments and interest rates are agreed at the time of the loan.


The ratio between the size of the loan you are looking for and the mortgage lender's valuation of the property.

Long-term care

Care you may need as a result of a permanent medical condition.


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A regular income paid by one person to meet the living costs of another. This could be child maintenance, maintenance for a former partner or both.

Market Level Adjustment, Market Value Adjustment and Market Value Reduction

In a unitised with-profits policy the amount an insurer will reduce the unit value if a policy is cashed in early. In a conventional with-profits policy the amount that a firm may reduce the return if the policy is cashed in early.

Married women's reduced rate

National Insurance contributions payable at less than the standard rate. Some married women pay at this rate but in return do not build up their own State pension and must rely on their husbands for financial support in retirement. On divorce, the right to pay at this reduced rate stops.

Maternity pay

If you're working and are having a baby you have the right to receive Statutory Maternity Pay, as long as you meet certain conditions.


A voluntary and confidential arrangement where an independent, impartial person helps two or more people or groups reach a solution that is acceptable to everyone.

Minimum payment

The amount you must pay each month on your credit or store card account to keep to the terms of the agreement.

Money laundering

The process by which criminals disguise and hide the money made from their crimes.

Money purchase pension

A pension where your contributions are invested in, for example, the stock market. The size of your fund depends on your contributions and how well your investments do. At retirement, you have a choice of options to provide you with a retirement income.

Money remitter

A firm that sends money overseas.

Money transfer operator (MTO)

A company that only offers money transfer services, usually through agents.


A loan to buy a property, which is secured against the property.

Mortgage broker

A mortgage broker helps you understand the various mortgage types and deals available to them. They may recommend a mortgage for you or they may provide you with information to enable you to make your own choice.

Mortgage protection insurance

Accident, sickness and unemployment insurance (or payment protection insurance) used to cover your mortgage payments.


The MOT scheme ensures consistent motor standards. Every vehicle in the UK more than three years old needs to be tested each year to ensure that it complies with the minimum standards.

Motor insurance

Pays out if you injure someone or damage someone else's property while driving. It may also cover damage to your own car.

MVR-free dates

When you can cash in your with-profits policy early or switch from with-profits funds without incurring a market value reduction.


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National Insurance contributions (NICs)

You pay NICs from your pay to qualify for certain social security benefits including the State Pension.

Negative equity

When the amount you owe your mortgage lender is more than the value of your home.

Net asset value (NAV)

An expression used with investment trusts to mean the value of the fund's underlying assets.

Net interest

Interest on savings after tax is deducted.

No claims discount

A discount (for example in motor insurance) if you haven't made a claim on your policy within a specified period of time (for example three years). However, the discounted premiums may still rise.

No longer authorised

A firm is no longer allowed to carry out certain types of business that the FSA regulate.

Nominal value

Sometimes called the 'face value', this is the cost of a bond when it is issued and the amount you get back at the end of the term.

Notice period

The time you have to notify the bank or building society that you want to withdraw your money without penalty. 30, 60 or 90 days are common notice periods.

Nursing care home

These homes provide a combined service of nursing and residential care and are better suited where more constant medical attention is needed.


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Occupational pension

A pension which is only available through employers and run by pension scheme trustees. There are two types - salary-related (also called 'defined benefits' or 'final salary') and money purchase (defined contribution).

OEIC (Open-ended investment company)

Also known as an ICVC. A type of open-ended investment fund.


A type of independent complaints scheme which aims to settle disputes about financial products or services impartially.

Open-market option

The option to shop around to compare annuity rates and arrangements offered by other insurance companies and buy an annuity from another provider if you find a better deal.

Outstanding balance

Any money you owe on a credit or store card.


A facility allowing you to spend more money from your bank account than you have in it. The bank will usually charge you interest and sometimes other fees as well if you do this.


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Your employer uses a P11D to tell HM Revenue & Customs (HMRC) about the value of any benefits in kind they've given you during the tax year.


A record of your pay and tax deductions. You'll get it from your employer when you stop working for them.


An annual summary of all your payslips. Your employer gives you one at the end of every tax year, if you still work for the employer. Keep it safe.


An entitlement of a firm set up in one EEA country to offer certain products or services in another EEA country. Broadly, such firms will be regulated in the country in which they are set up and meet standards which have been agreed across all EEA countries

Paternity leave and pay

When your wife, partner or civil partner gives birth or adopts a child, you may be able to get Statutory Paternity Pay - money that's paid by your employer to help you take time off work.

Payment allocation

All credit card companies will reduce your overall balance in a specific order and they must let you know in what order they allocate your payment to the balance.

Payment protection insurance (PPI)

An insurance policy to help you keep up your loan repayments, for example on a loan or credit card, in the event you can't work because of redundancy, accident or illness.


Shows how much you've been paid by your employer and also how much tax you've paid. Your employer should give you one each payday.

Penny shares

A type of share that is very high risk, can be difficult to sell in some cases and may be quoted in pence, hence the name.


An investment that you pay into over time to provide you with an income when you retire. There are different types of pension.

Pension attachment

See 'earmarking'

Pension Credit

People aged 60 or over living in Great Britain could be entitled to Pension Credit, which gives them extra money each week.

Pension offsetting

Arrangement in a divorce settlement where one person gets a larger share of some possessions in exchange for giving up a claim to others - for example, one person might receive a lump sum while the other retains the home or the whole of their pension savings.

Pension sharing

A method of splitting pensions on divorce, where some of one person's pension savings are transferred to the other person, so the latter has their own pension savings.

PEP (Personal Equity Plan)

A wrapper for investments. No longer available as all PEPs automatically became stocks and shares ISAs from 6 April 2008.

Personal pension

A pension that you take out yourself say if you're self-employed or your employer does not offer access to one.


Fake emails trying to con you into giving your personal details.


The details of what your insurance covers, what it doesn't, and what it costs - normally provided separately.

Policyholder Advocate

A person appointed to negotiate with the firm on behalf of the with-profits policyholders during a reattribution process.

Pooled investments

A way of putting various levels of contributions from lots of people into a single investment fund. There are different types and they work in different ways.

Pre-funded long-term care insurance (LTCI)

An insurance policy you buy in case you might need care in the future. These policies may sometimes be linked to an investment plan.


The amount your insurer requires you to pay for insurance cover.


A firm that is responsible for any appointed representatives. The Principal must be authorised if it or any of its appointed representatives are carrying out FSA-regulated business.

Priority debts

Debts that should be paid first, to stop you potentially losing your home or getting a criminal record. These include rent, mortgage and any secured loans; gas, electricity and water bills; child maintenance; and council tax.

Private medical insurance (PMI)

Insurance that pays for you to receive private medical treatment.

Protected-rights pension

The part of your pension fund which was used to contract out of the State Second Pension (SERPS or S2P) and which must be used to buy a 'protected rights annuity'.

PSD Agent

A firm that is an agent of a firm that has permission from the FSA to carry out payment services.

Pyramid scheme

Sells false promises of quick and easy money.


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Rate of return

The change in the value of your investment taking into account both income and growth.


A formal opinion of a security's or organisation's investment quality and credit risk.


The result of a negotiation which exchanges with-profits policyholders' rights to a future share in the distribution of the inherited estate for an earlier one-off payment.

Redemption date

Usually associated with gilts or bonds, it is the date (set in advance) when the gilt or bond will be repaid by the issuing government or company and you will receive the nominal value of the bond.


Redundancy is a form of dismissal from your job, caused by your employer needing to reduce the workforce.

Reference rate

The interest rate used as a basis for calculating any interest to be applied to an account (deposit or borrowing). This is calculated by reference to an external source, such as the Bank Rate or LIBOR.

Registry of Credit Unions and Industrial and Provident Societies

A government department which registers all credit unions and industrial and provident societies in Northern Ireland. Previously called Companies Registry.

Regular bonus

A bonus paid to your with-profits policy each policy year which becomes guaranteed once it is paid. Also known as a 'reversionary' or 'annual' bonus.


The process of changing your mortgage for a different one, without moving home.

Repayment mortgage

A mortgage that pays off both the initial loan and the interest that accumulates on that initial amount. If you make all the payments the mortgage will be fully repaid.


The amount you have to pay back to the lender (usually monthly) when you borrow money.

Residential care home

Homes that provide residential care but not nursing support. Assistance is provided with personal care, such as dressing and washing, if required.


The time from when you start to take the benefits from your pension. You can carry on working if the scheme rules allow.

Roll-up mortgage

A type of lifetime mortgage. The interest on the loan is rolled-up each month or year and added to the loan. This means you may end up owing more than the value of your home (ie more than you borrowed).


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Your pay if you're paid monthly or the amount you're paid for the year.

Salary-related pension scheme ('final salary' or 'defined benefit')

A type of occupational pension. The amount of pension you get is worked out on your salary at or near retirement, or when you left employment, and your pensionable service.


The specific details of what's covered, and what's excluded, by an insurance policy.


When a loan is 'secured' on your home, it means the lender can repossess your home and sell it to get their money back if you don't keep up your repayments.


Someone who runs their own business.

Self-invested personal pension (SIPP)

A pension for people who want to manage their own pension fund by dealing with, and switching, their investments when they choose.


The process of a couple, whether married, in a civil partnership or unmarried, splitting up.

Service provider

A company that provides you with a utility service, such as gas, electricity or water.

Shared appreciation mortgage

Some lifetime mortgages include this element. The lender gives up the right to get some or all of the interest on the loan. Instead, you agree to allow the lender to take a share in any increase in the value of your home when it is sold.


A stake or share in a company.

SICAV (Société d'investissement à capital variable)

A type of open-ended investment fund.

Small payment institution

A firm that has permission from the FSA to carry out payment services.

Small self-administered scheme (SSAS)

This is an occupational pension scheme for a small number of members who are usually all company directors or key staff. It allows greater flexibility and control over the scheme's investments.


A method used to help reduce volatility in a with-profits fund by balancing out the profit made in good years against losses made in bad ones.

Sort code

An identification number for each bank and building society branch. Usually found on your cheque book, bank statement and debit card.

Stakeholder pension

A pension that meets government standards for charges, access and flexibility.

Stamp duty

A tax which home buyers must pay on properties above a certain amount (set by the government).

Standard variable-rate mortgage

A loan at the lender's normal mortgage rate - ie without any discounts or deals. It moves up or down at the lender's discretion.

Standing order

A way of paying bills from your current account. You sign a form sent to you by the company you are paying. This sets out the amount to be paid and the payment dates. You give this to your bank or building society which then pays the amounts on the agreed dates. The amount stays the same until you tell the bank or building society to change it.

State benefits

The State provides some financial help for most situations but it may depend on your income and savings (ie means-tested).

State Pension

A government-administered pension based on your National Insurance contributions.

State Pension age

The earliest age at which you can take your State Pension.

State Pension forecast

Gives you an estimate of how much State Pension you may get when you reach State Pension age.

State Second Pension

An additional State pension paid on top of your basic State Pension. This was called SERPS. You cannot build up a State Second Pension for any period during which you are self-employed.


A regular notification from your bank or credit card company that shows the payments in and out of your bank account or, for credit cards, shows what you've spent, what you owe, the minimum you must pay and the latest date you can pay it.


Another term for shares.

Sub-prime lender

A lender that specialises in offering loans or mortgages to people with poor credit ratings.


A report on the condition of the property you are planning to buy.


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Taken up

The active individual works for the appointed representative listed on the same page.


A charge you pay to the government - there are different types of tax but income and inheritance tax are the ones most people may be aware of.

Tax credits

Payments from the government if you're responsible for a child or if your wages are low.

Tax year

6th April one year until 5th April the following year.

Tax-free lump sum

HM Revenue & Customs (HMRC) limits how much you can take as a tax-free lump sum from your personal or stakeholder pension fund - currently up to a quarter (25%) of your fund - before converting the fund into income. For occupational pensions it depends on the rules of the scheme.


A person who pays rent to live in a home they do not own.

Term account

Savings accounts where you have to leave your money untouched for a set period (the term).

Term insurance (or term assurance)

Life insurance giving protection for a specific amount of time (the 'term').

Terminal (or final) bonus

The bonus calculated and added at the end of your with-profits policy.

Tied Agent

A firm that may be acting on behalf of an authorised firm or an EEA-authorised firm (its Principal). The Principal must accept responsibility for the tied agent's activities. To see the name and details of the Principal of a tied agent, click on 'Principals' at the top of firm's record.

Tracker mortgage

A mortgage with an interest rate linked to a particular base rate, which it moves up and down with.

Trading at a discount/at par/at a premium

Expressions used with investment trusts meaning the value of all the investment trust's shares combined are below (discount), equal to (par) or higher (premium) than the underlying investments.


When you make a purchase, this generates a transaction that is charged to your credit card account.

Travel insurance

Pays out if you unexpectedly have to cancel your holiday; are taken ill while away; accidentally injure somebody or damage somebody else's possessions; lose your own possessions; and so on.


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Unable to hold client money

The firm cannot hold money on behalf of its clients. Any monies must be made payable directly to the firm providing the product rather than the firm advising on the product.

Unauthorised overdraft

Spending more money than you have in your account without the bank's permission. If you don't have enough money in your account, the bank can refuse to pay cheques, direct debits and other payments you want to make. This could also result in expensive charges.

Unit Price Adjustment

See Market Level Adjustment.

Unit trusts

A pooled investment which is 'open-ended'. It gets bigger as more people invest and smaller when they take money out.

Unitised with-profits fund

A with-profits fund that is sub-divided into units.

Unsecured pension

A way of taking an income from your pension fund up to age 75, while leaving the rest of your fund invested, although this involves some risk to your pension fund. There are two types of unsecured pension - short-term annuity and income withdrawal.


Services provided to you such as gas, electricity or water.


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Variable interest rate

Interest rates offered by banks and financial institutions on loans or deposits which are liable to change according to circumstances. For example, a movement in the interest base rate set by the Bank of England could be an influence.


A brief inspection, for the benefit of your lender, of the home you hope to buy. The lender wants to make sure that the property's value is suitable security for the mortgage.

Voluntary excess

Insurance quotes are partly dependent on the excess. The excess is the amount of any claim you would be willing to pay before the insurer steps in to cover the remaining costs. The voluntary excess is the amount you select when applying for a quote or policy.


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Your pay for doing your job if you're paid hourly, daily or weekly. Almost all UK workers have a legal right to a minimum level of pay, called the National Minimum Wage.


A written guarantee given to the buyer by the manufacturer or dealer, usually specifying that the manufacturer will make any repairs or replace defective parts free of charge for a stated period of time.


This sets out who is to benefit from your property and possessions (your estate) after your death.

Winding up

The closing of a company's occupational pension scheme.

With-profits fund

A type of fund available within a life assurance investment where premiums for a with-profits policy are pooled with other with-profits policyholders. Everyone in the fund shares the profits and losses.

With-profits policy

A policy such as a pension, endowment, bond or whole-of-life policy which is invested in a with-profits fund.


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What a bond pays to investors by way of interest as a percentage of its price.


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